Intel lowers revenue forecast, blames Europe

Intel Corp. hedged its second-quarter revenue forecast lower Thursday, citing soft demand for its chip technology in Europe as the cause.

Intel, based in Santa Clara, California, now expects to report revenue of between US$6.2 billion and $6.5 billion for its second fiscal quarter, ending June 29. The company had earlier predicted it would post revenue of between $6.4 billion to $7.0 billion for the period.

"Intel's business performance is consistent with the low end of historical patterns for the second quarter," said Andy Bryant, executive vice president and chief financial officer at Intel, during a conference call with press and analysts.

Weak demand for products in Europe is the main cause for the lowered expectations, he said. In addition, slower sales of its chips for desktop PCs in all regions also hurt the company, despite solid sales of notebook and server products, Bryant said.

"If you look at historical patterns, we thought Europe would be stronger in the quarter," Bryant said. "It's actually worse than you would have seen in past years, but not a lot."

Intel said it expects to see a stronger second half of the year.

The company also said acquisition-related costs and other charges are expected to be $230 million for the quarter -- higher than a previous forecast of $115 million in charges.

The revised forecast suggests that Intel's second-quarter revenue will be 4 percent to 9 percent lower than the figure reported in its first fiscal quarter, a traditionally strong period. The revenue figure would be slightly above or below the $6.3 billion reported in last year's second quarter.

Intel saw some bright spots during three months just ended as it satisfied what it called pent up demand for its lower-end Celeron products. Sales of its Celeron chips are higher than they were at this point during Intel's first quarter, the company said.

"We are seeing Celeron being a higher percentage (of shipments) than expected," Bryant said. "There is more strength in Celeron than we expected."

Shares of Intel (INTC) fell by more than 4 percent during Thursday's trading, before the revenue forecast statement was issued, to close at $27 per share on the Nasdaq exchange.

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